6/9/2012, Software Helps Auto Insurance Companies “Low-Ball” Claimants

http://www.pissd.com/2012/06/software-helps-auto-insurance-companies-low-ball-claimants/

A recent article in ComputerWorld, of all places, expresses some concerns about the use of such software in the evaluation of claims. Here are excerpts:

Claims software used by many large auto and homeowners insurance vendors in the U.S. has allowed the companies to manipulate claim payments and “low-ball” customers, according to a new report from the Consumer Federation of America.

Injury evaluation software, including CSC’s Colossus package, allows insurance companies to “tune” payment perimeters and reclassify injuries as less serious than the diagnosis from a doctor, said the report, by Mark Romano, a former Colossus expert at Allstate Insurance, and Robert Hunter, a former insurance commissioner for Texas.

The claims software, adopted by many U.S. insurance companies in the past 15 years, “has enabled many insurers to increase profits by reducing the amount paid to consumers who filed bodily injury liability claims,” the report said…

CSC originally marketed Colossus as a cost-savings product, but shifted to talking about the software as a way for insurance companies to achieve consistency in claims payouts, the report said. Some insurance companies were uncomfortable with the software marketing as a money-saving package, said the report, referencing CSC materials made public during a class-action lawsuit against the software vendor settled in 2009…

Insurers can also use the software to downgrade, en masse, the diagnosis of certain injuries, or pair the claims software with medical repricing software that reduces the “usual and customary” medical costs to be reimbursed, the report said.

The Consumer Federation of America called on state insurance commissioners to investigate claims software vendors and insurers for unfair business practices or unfair claims settlements.

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